9/13/2007 @ 6:00PM

Most Expensive ZIP Codes

Last year, sellers in Alpine N.J., took their lumps like the rest of those trying to unload their properties in today’s real estate market. The borough (population: 2,200) saw sales volume plummet by nearly half. Only 19 homes were sold between July 2006 and June 2007, compared to 36 the year before.

Though sales were down, values went up. The area’s median home sale price jumped $1.06 million to $3.4 million. That’s enough to place the northern New Jersey ZIP (07620) in a tie with Miami Beach’s Fisher Island (33109), for No. 1 on our list of the nation’s 500 most expensive. (Click here for methodology.)

It’s easy to see why. Alpine has provided New York’s power brokers a quieter lifestyle since steel magnate Henry Clay Frick put the borough on the map in the early 1900s. Last year, the hamlet, which boasts rolling hills and multi-acre mansions, was the site of the market’s highest-priced home sale: Richard Kurtz’s $58 million purchase of a 10,000-square-foot home on 63 acres of land. He now calls hip-hop royalty such as Sean “Diddy” Combs, Fabolous and Lil’ Kim neighbors.

Fisher Island, a man-made body of land named after developer Carl Fisher, is just as luxe. It teems with large waterfront mansions and boasts an impressive country club. It boasts a median income of $200,000 and residents including mutual fund manager Martin Zweig and Vector Group Chief Bennett Le Bow.

Behind The Rankings

The list is dominated by ZIPs in the nation’s coastal states. Blame it on supply and demand. There just aren’t large plots of land waiting to be developed along the Pacific Coast Highway or in West Palm Beach. Scan local listings and you’ll find that 120 feet of Palm Beach beachfront starts at $20 million. Want an acre in Newport Beach? You’ll be lucky to pay under $5 million. Oceanfront properties like these, real estate agents say, are more desirable than acreage along a lake or prairie.

The top ZIPs also tend to be in areas boasting healthy industry and reflect the investments of the local economy’s beneficiaries. Silicon Valley tech billionaires buy in Los Altos, Calif.; bonus-rich Wall Street bankers scoop up summer homes in beach towns such as Amagansett, N.Y.; film stars often settle in Beverly Hills, Calif. What’s more, foreign oligarchs don’t tend to go too far inland: The flights from Tokyo to San Francisco or from Moscow to Miami are already long enough.

This is nowhere more evident than in California. The Golden State boasts 291 of the nation’s ritziest areas.

In Rancho Santa Fe (ZIP 92067), outside San Diego and No. 3 on the list, a median house runs $2.58 million. Close on its heels are Santa Barbara (93108) and Ross (94957), representing the Central Coast and Bay Area, respectively. In Los Angeles, Santa Monica (90402) beats out Hollywood and the vaunted 90210 Beverly Hills ZIP code for the title of Los Angeles County’s most expensive.

Back east, New York posted 79 top enclaves, a figure that jumps to 139 when joined with tri-state neighbors New Jersey and Connecticut.

Still, though Manhattan is home to some of the world’s most expensive real estate, only three Big Apple ZIPs broke the top 100. The reason? ZIP codes aren’t drawn to reflect neighborhoods, and top properties in dense areas are often brought down by less expensive ones.

Take 10021: Financier J. Christopher Flowers spent $46 million last year on a townhouse at 74th Street and Fifth Avenue. While nearby properties haven’t commanded as much, it still takes double-digit millions to play in that Upper East Side neighborhood. Not so further east, between Second and York Avenues in the 60s and low 70s–an area called Lenox Hill–there are numerous high-rise condos and co-ops listed for between $300,000 and $550,000. Both neighborhoods share the same ZIP.

That’s because ZIP codes, which were implemented by the Postal Service in the 1960s, were designed to handle the era’s growing population and increased volume of business mail. The first number identifies the region, with zero being the Northeast and nine being the West Coast.

Numbers two and three identify the metro area, and the final pair specify the post office. Though often shorthand for neighborhoods, ZIPs don’t change to reflect shifting neighborhood or demographic boundaries. The result? Our list is a bit slanted toward low-density enclaves like Alpine, where there are 333 people per square mile, as opposed to parts of Manhattan, where there are 45,800 people per square mile and a larger variance of home prices.

Though our list is heavy with ZIPs along the coasts, areas in the Midwest and South show up as well. Kenilworth, Ill. (60043), located along Lake Michigan’s north shore, nabbed 19th place, as area home sales reached a median price of $1.66 million. Despite slumping sales across Arizona, Paradise Valley (85253) came in 35th at $1.41 million, behind a strong 236 sales. Sullivan’s Island, S.C. (29482), Hatteras, N.C. (27943), Wrightsville Beach, N.C. (28480) and Great Falls, Va. (22066), are all, technically, in coastal states but were the only remaining non-Northeast, West Coast and Florida ZIPs in the top 100.

Methodology

We based our rankings on each ZIP’s median home sale price, between July 2006 and June 2007, as collected by First American CoreLogic, a national real estate data collection and research firm that tracks over 150 million parcels in over 3,000 counties, amounting to 99% of all real estate transactions. The data included all residential land transfers and all arms-length transfers; all sales noted were ones in which the buyer and seller were not the same and the transaction was greater than $3,000. Demographic information such as median income and population density are from the U.S. Census Bureau’s 2000 American Community Survey, the most recent. Densities are measured on a persons-per-square-mile basis and are rounded up to the nearest whole person.